Hidden Value: 8 Term Life Insurance Riders You Should Consider

So, you’ve done your homework regarding how much life insurance you need and what type of policy best fits into your current financial situation. Congratulations! You’ve tackled the most challenging part of the decision-making process. There are, however, a few more things you need to decide on – does the policy you’re leaning towards offer life insurance policy riders and, if so, which ones fit into your unique position?

If you’ve been completing online quotes or discussing your options with an agent, you’ve probably heard the term “rider” before. Before we get started discussing your options, let’s begin with a brief introduction into life insurance riders and their benefits.

What is an Insurance Rider?

A rider is an add-on provision to your basic life insurance policy which provides additional benefits for an additional premium. An amendment to the original contract, if you will. It allows you to customize your life insurance policy in order to prepare for specific, unforeseen circumstances, as defined within the rider.

The options available to you will vary by insurance company and policy, as will the parameters regarding how each one works. The add-on premium price will also fluctuate, depending upon factors such as your age, health, and policy type. While we cannot list every available rider, we’ve compiled a list of those we feel are the most useful. When discussing life insurance options with your agent, be sure to include these in your discussion.

1) Disability Income Rider

This rider’s benefits are exactly as they sound – if you were to become disabled and unable to work, the policy would pay you a monthly stipend, as defined by the parameters of your policy. The pay-out specifics vary from policy to policy: some will only pay out if you’re disabled from an accident, while others pay out for either an accident or sickness. Some policies provide income for the length of the disability, while others limit your benefits to a defined length of time.

While many consumers choose to purchase disability insurance through their employer, the policy ends, once employment has terminated. By purchasing the disability income rider, you have peace of mind of knowing exactly when the offer expires, as it runs congruently with your life insurance policy.

2) Waiver of Premium Rider

Even if you choose not to purchase the disability income rider, you might want to consider the waiver of premium rider, which ensures that, should you become disabled, the parameters of your policy will remain the same, even if you cannot pay your premium.

If this rider is important to you, be sure to compare the fine print on each policy you’re considering, as every life insurance company defines disability a little differently. Your insurance agent can help you read between the lines to ensure you invest in a policy that meets your needs.

3) Term Conversion Rider

This rider comes standard on most life insurance policies. It allows you to convert your term policy into a permanent life policy without submitting to another medical exam. If the policy you’re considering does not include this rider automatically, inquire further with your agent as to why and how much it costs to add it on.

Most of us would still find value in a life policy for years after the term limit has expired. This rider will make the entire process easier and more affordable.

4) Acceleration of Death Benefit Rider

Imagine you’ve been diagnosed with cancer and the doctors have given you 6 months to live. A grim thought, but a daily reality for many. During that time, you’ll likely incur thousands of dollars in medical expenses. With this life insurance rider, you can start receiving your death benefit pay-out now, to assist with those medical bills.

Some life insurance policies come with this rider built-in, but if yours doesn’t, we suggest adding it to your policy. A terminal illness can become expensive quickly; this is a great way to ensure your family isn’t stifled with those bills long after your passing.

5) Long-term Care Rider

A long-term care rider is often compared to a long-term care insurance policy. It takes money out of your death benefit to pay for your long-term care expenses, such as a nursing home or a private nurse.

Some insurance companies lump this coverage in with the accelerated death benefit rider, so you will want to inquire further, when discussing these benefits with your agent, to ensure you receive the coverage you need.

6) Critical Illness Rider

With this rider, your insurer will pay you a lump sum should you be diagnosed with an illness or condition, such as cancer, stroke, kidney failure, or heart attack. The list varies from policy to policy, but the benefit remains the same – the rider provides your family with the money needed during the course of your illness’ treatment.

7) Guaranteed Insurability

Let’s face it; life can change in an instant. Because we never know how our health could change, this rider is a great addition to any life insurance policy. It allows for you to purchase additional coverage at a later date, without submitting to another medical exam or evidence about your insurability. The option to purchase more coverage typically comes up at different intervals, such as every four years, or at certain ages. When determining the additional cost, the insurance company considers your age and not your health.

8) Child Protection Rider

While the death of a child is something none of us ever want to think about, it is a possibility that should be considered. Most of the time, losing a child does not result in a loss of income, but there are other factors to think about. How will you pay for final expenses? How will you be able to handle the emotional tragedy? Will you be able to go back to work right away or will you need to take time off? If the child’s death is due to illness, how will you pay for the medical bills that have accumulated?

This term life insurance rider offers coverage for those final expenses, should the unthinkable happen. You can purchase coverage in increments, typically of $1,000, and the premiums are typically reasonable in price.

Every family’s situation is unique, so there is no one-size-fits-all answer as to which riders should be included in your term policy. When shopping for the policy that best fits your short and long-term needs, it’s best to speak with an experienced and knowledgable life insurance agent. They can help you make an informed decision and identify the right policy package, at the right price. Shopping for insurance is never fun, but your agent should help take some of the guesswork out of the process.